Trade, Logistics Implications of Donald Trump’s Reelection

The reelection of Donald Trump as president of the United States is raising concerns about the future of Mexico-US trade relations. While the election results have cleared a major uncertainty of this year, many are now focusing on the policies that Trump will implement during his second term, especially regarding tariffs and bilateral trade dynamics.

During his campaign, Trump promised to increase tariffs by 25% on Mexico as a punitive measure in response to the flow of migrants. In light of this threat, Mexican President Claudia Sheinbaum expressed confidence that the relationship between the two countries would remain positive. Sheinbaum highlights the importance of high-level meetings once the election results are confirmed, particularly to address critical issues such as the fight against drug trafficking, the reduction of fentanyl shipments, and immigration management. 

Sheinbaum also highlights the ongoing collaboration with business leaders to strengthen the commercial relationship through the USMCA, underscoring that the agreement benefits both Mexico and the United States.

Trump had previously threatened to impose tariffs exceeding 200% on vehicles imported from Mexico, which is part of his plan to protect US auto manufacturers by preventing the introduction of Mexican-made vehicles into the US market. This proposal follows Trump’s previous vow to impose a 100% duty on imported cars and trucks, aimed at strengthening the domestic auto industry, as previously reported by MBN. 

Trump had also promised more tariffs if reelected, including a 60% tariff on Chinese goods and a 10% tariff on products from the rest of the world, and his previous tenure saw the implementation of tariffs that strained US relations with its trade partners, including Mexico, as previously reported by MBN. 

Trade Tensions and Economic Implications

The Peterson Institute for International Economics has warned about the potential economic impact of Trump’s proposals. For example, Trump had threatened US manufacturer John Deere with a 200% tariff if the company moved production to Mexico to export those goods to the United States, which would be duty-free under the USMCA. While no precedent exists for a US president imposing tariffs in this manner, the threat creates uncertainty for investments in Mexico.

An economic analysis forecasts that an increase in tariffs could negatively affect the GDP of the United States, Mexico, and Canada by 2028. It is predicted that US GDP could fall by 0.36% due to the tariffs, with Mexico and Canada also experiencing significant declines. Moreover, economic growth in China could also be hindered due to reduced trade, potentially redirecting investments toward other markets with less exposure to the United States.

Nearshoring and Its Impact on the Supply Chain

On the other hand, some expect that nearshoring would benefit from Trump’s reelection, as US companies are expected to continue bringing their manufacturing operations to Mexico. Gerardo Tajonar, President, National Association of Importers and Exporters of Mexico (ANIERM), points out that nearshoring could strengthen Mexico’s role in North America’s supply chain. However, he also highlighted that Trump’s protectionist policies pose risks, and a solid strategy is necessary to balance the benefits of investment with trade challenges.

Paola Nuñez, Head of Retail Logistics, Holcim, says that if Trump tightens border policies, transportation costs at the border could increase significantly, affecting logistics and creating bottlenecks in supply chains. 

Logistics Sector Implications

The potential imposition of tariffs has made some shipping companies consider shipping non-time sensitive goods before the tariffs are implemented. This could create a ripple effect and lead to port congestion and increased demand for logistics services.

Additionally, Trump’s expected support for the conventional energy sector could impact transportation costs, as fluctuations in fuel prices may arise. “[If] Donald Trump gets elected, and the 60% China tariff happens, let us say starting Jan. 1, 2026, we will see front-loading like we have never seen before in 2025. There would be a massive pull-forward of demand as everybody rushes to bring in long-life inputs and goods from tariff countries, especially China,” said Jason Miller, Eli Broad Endowed Professor of Supply Chain Management, Michigan State University, to Lloyd’s List. 

Bindiya Vakil, CEO, Resilinc, tells the WSJ that Trump’s promised tariffs could reshape global supply chains and force companies to re-evaluate their sourcing strategies, potentially accelerating the trend of nearshoring or reshoring production.

These challenges add to the not-solved problem with the International Longshoremen’s Association (ILA), which agreed to extend its existing contract until Jan. 15, 2025. The association aims for better wages and the exclusion of automation. “American workers should be able to negotiate for better wages, especially since the shipping companies are mostly foreign flag vessels, including the largest consortium One,” said Trump as a result of the strike. Adding complexity to the problem, Trump is set to begin his term on Jan. 20, 2025.

Opportunities and Challenges for Mexico Amid Trade Tensions

Despite the threats and the potential review of the USMCA, experts like Matt Silver, CEO, Cargado, believe that Mexico could benefit from Trump’s reelection due to increased manufacturing investment. Silver mentioned that tariffs would negatively affect trade with China, accelerating the strategy to move production to Mexico.

The 2026 USMCA review will be crucial in determining the future of Mexico-US trade relations, says Kenneth Ramos, Partner, AGON Economía/Derecho/Estrategia. Trump’s stance on immigration, drug trafficking, and tensions with China could alter trade dynamics, making it necessary for Mexico to adapt its strategy and strengthen its position in the agreement.

Despite the opportunities, Nuñez also mentions that the uncertainty about tariffs and the future of trade policies could slow foreign investment in Mexico, particularly in sectors like nearshoring, which depend on a stable economic and political climate. She suggests that it is crucial for companies to diversify their markets and adjust their operations to adapt to potential changes under the Trump administration. Public-private collaboration will be more important than ever to tackle the challenges ahead, and it is essential for Mexico to strengthen its logistics and resilience to maintain its competitiveness in the global context.